The Plan

No Guards
The life of every village is the villagers. And the life of the villagers is health. The goal of running a village with no guards is to preserve as many villager lives, and as much health as possible for as long as possible.

The town's completed defenses provide 480 points of Defense. Once the walls and gate break in an attack (and they will at some point) this is reduced by 25% to 360. Additionally, every house of every living villager can provide an additional 8 points of defense.

So, a village with no one guarding the walls or gates or towers, can provide a Defense value of 360 + (8 x villagers). For a village of 40, this is 680 Defense. As long as the Attack is below this, no villagers should be harmed. Villagers should be able to survive beyond this threshold by another 80 points as well. (760 attack, all villagers would be wounded, but should survive)

Beyond this point, guards will need to be assigned to add enough defense that villagers hiding in their homes will not perish. All of these guards are expected to die. But it will buy another day for the town.

Construction
Because we will not be using guards to boost the towns defense, it will be important to make certain that both the gate and wall are well balanced (this includes the moat). Additionally, we will need to make sure that each night we have constructed enough defenses that the Defense value is above the Attack value. This should not be difficult since resources normally directed at constructing Towers will be available to upgrade the walls and gate.

Map Clearing
It is fully possible to clear all monsters from the map. Though it requires a significant investment, it may in fact be better than allowing them to control the forest.

Once an area of the forest has been cleared of monsters, there is still the possibility of new dwarves spawning in it somewhere, and these groups will spread like normal. So, the town will need several dedicated villagers intent on exploring as many tiles as possible each day to locate these groups of dwarves before they become large enough to be an issue. And supporting them we will need 2 to 3 small teams of players who can respond to dwarf clusters and eliminate them efficiently.